How To Buy Your First Home: The Lesson We All Wished We Had In School

School teaches us quite a lot, but none of the stuff we need for real adulting. Finding insurance, paying taxes, buying a house, these are all essential tasks that have been neglected by the school system.

Sadly, we can’t single-handedly change the school system, but we can show you how the process of buying a house works.

There are several stages in the process of buying a house, which takes around six months from start to finish usually. Before you head out to find a dream home entirely out of your budget, there are a few things you need to do: 

How much can you afford to borrow? 

Use an affordability calculator to see how much you will be able to borrow from a lender. It’s recommended that buyers only look at homes no more than 3-5 times their annual income. 

Save the down payment 

You’ll then need to save for a deposit. When buying a house, it’s typically expected you pay 5-20% of the asking price upfront.

Pre-apply for a mortgage 

Once you’ve saved a decent lump sum for a down payment, you need to get preapproved for a mortgage. This essentially means a lender will agree to lend you a certain amount of money, paid back in monthly installments. 

To apply for a mortgage, the lender will need quite a lot of information about your current income, investments, savings, and debt. This will help them gauge how much they are willing to lend.  

Choose an estate agent 

With an idea of how much you can spend, the next step is to find an estate agent. According to Zillow’s housing trend report in 2020, 85% of buyers last year found it helpful to use an estate agent to get them through the process. Real estate agents, like Jen Jewell, can offer free home evaluation Orangeville wide, as well as negotiate price on your behalf and provide you with current market trends. 

Find your dream home 

Now the fun bit: House shopping. Once you’ve found a house you love, it’s time to put in an offer with the help of your estate agent. If it’s accepted by the seller, the house goes into ‘escrow’. This essentially means it’s reserved. 

Property Appraisal

Before your lender signs off on the agreed loan, a third party will provide a full property appraisal to make sure it’s really worth the amount you’ve offered. If the price is fair, the process can continue. 

Closing the deal 

First, the seller will need to provide paperwork to prove they have the right to sell the property. Then, it’s your turn. You’ll need to sign the contract, agree to the loan terms, provide proof of your income, and pay the closing costs. This is around 3-5%. The lender will then release the requested money, and you’ll get the keys! 

And that’s the basics! There are a few other things you need to consider throughout the process such as homeowners insurance and paying commission to the estate agents, but this is the general gist.